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tv   Bloomberg Surveillance  Bloomberg  July 9, 2014 6:00am-8:01am EDT

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prospers, the other's struggles. ernest to media moguls will read hemingway on their gulfstream's to sun valley, idaho. this is "bloomberg surveillance." wednesday, july 9, i am tom keene with adam johnson and stephanie ruhle today. she hasn't been up this early since her kids got her up this early four days ago. she beaten to death, hopefully, she won't be tested at. let's get started with the morning brief. picture as weixed often do when we look at economic data run the world. in the u.k., housing prices rose 2.3%. in china, producer prices fell by about 1.1%. >> the u.k. thing is a big deal. said the bank of england governor effectively said about two weeks ago that he was surprised that people had not thought about a rate hike
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and the british pound is now trading higher. >> how much of a big deal is any of it? central bankers have made clear they will do whatever it takes. the safety net is there. economists love to pore over these numbers, but when you look how investors are reacting, they seem to be looking long. >> long on the british pound. it will be expensive for you to buy those suits in the u.k., tom. moving on, data in the u.s.. 7:00 to get the weekly mortgage applications. fomc.e i'm watching, got a bead on that? >> everyone seems to be paying attention to it. if you look at fomc meeting minutes the last few times, it has been somewhat of a muted reaction. seems like we could get the same today. >> i'm looking for the pivot, but i don't think we will get anything anytime soon. no learning to speak of. that 4:00, with a thing called soccer. >> i think that is getting a
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little more focused than the fomc. >> i don't think we will see another seven-one game. >> wells fargo on friday. we go to a busy week next week on earnings report. we will do that here at "bloomberg surveillance." look at the data check. the euro stronger. oil is weaker. oil hasn't moved. let's move onto the vix. 11.98. a little bit elevated, but no big deal. there is brent, well under 110. wheat futures. when was the last time i quoted the sauce? let's go over to the monitor. here is the china boom. we come down, high prices for wheat. jpmorgan saying your grocery
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bill will get a little calmer here the coming months. maybe beef prices will finally come down. we have looked at the front pages and the webpages. stephanie ruhle has the front page. >> you know what we're going to start with, israel on the brink. palestinian rockets fired at tel aviv and israeli troops are outside gaza, poised for an official invitation. israel military says 160 rockets were fired because little damage. many were shot down by israelis aren't on defense system. these really cap and has authorized the call up of 40,000 reservists -- the israeli cabinet has authorized the call up of 40,000 river reservists. israel says the latest round of airstrikes on gaza designed to hold hamas'ability to fire
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rockets. : 40,000, what does this mean everyone think? are we getting closer to it out all-out war? the scope and scale of the containment of gaza, the number of people squeezed into that space sets up a permanent tinderbox. i think even israel understands that as well. >> trace the palestinian authority president abbas actively last night on television asking for international help. which is it is hamas effectively launching rockets into israel, not the palestinians per se. he is saying, we need help. it is a cacophony of confusion and has been for so many decades. >> clearly, this geopolitical firestorm has everyone focused. our second front-page story of the morning, president obama has asked congress for $3.7 billion to handle the flood of child
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immigrants. there has been a surge of illegal immigrants from central america, many of them unaccompanied children. the money would increase to and also boost court capacity, so decisions can be made quicker. president obama heads to texas today in a meeting with governor rick arey and others about this crisis -- governor rick perry and others about this crisis. >> this came out of nowhere. >> we were not even talking about this four days ago. and we find there are 52,000 children? >> children. >> it is hard to fathom. >> $76,000 per child is what you of out of $40 billion -- out $4 billion. think of the day care you could set up with that. >> the money is not to help educate, clothes or feet, but to help the court system process. honestly, this money is merely for bureaucracy. >> this is not about daycare. we can't make any joke about it.
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>> i can't believe tom keene agrees with me. times" orw york "oppose" has a beautiful breakdown of that $4 billion -- or "the post" has a beautiful breakdown of that $4 billion. >> right now when we are hearing this over the last few weeks, more and more people from the market, this makes us think or claim president obama is a reactionary president. to ask for this money now just to handle the court system? i don't know. the third front-page story, this one close to home for me, citigroup close to an agreement to resolve that investigation into the sales of mortgage-backed bonds. sitting have to pay at least $4 billion according to people familiar with these talks. according to "the new york times," the total could be $7 billion when you include borrower really such as mortgage
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of occasions. misledue, whether citi investors about the quality of bonds backed by mortgages. last month citi offer less than $4 billion and prosecutors broke off talks. this seems like the gift that keeps on giving. when it comes to what banks are being fined, it is a never-ending story. >> let me do a on jpmorgan. up.g it operating income. look at the different sides of the banks that begin to blur into one big to be developed. citi's operating income was about 57%. what was jpmorgan? paribas. talking bnp >> what was jpmorgan a while back? or 13.nt to say 11 credit suisse paid not long ago
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-- >> so 7 billion about fits in on the 57% compared contrast. the 57% compare and contrast. >> those are the front-page stories of the morning. >> thank you. it was amazing to see yesterday. anyone who has competed in sports had to be thunderstruck at the scope and scale of brazil's collapse during the semi final match with germany. is history of the world cup maybe 1974, maybe 1954. germany simply crushed brazil enacted with uncommon grace as brazil came to ribs with arguably the worst defeat in the history of sports. hans nichols celebrated with all of germany. he is in frankfurt this morning. i am fascinated. what was the reaction of the german people? fireworks.
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lots of explosions. i went to bed when they were up 4-nil and i kept getting woke up every time they scored. i thought it was the fourth of july. it was germans and their fireworks. >> said is that for the view forward. is it germany, after their defeat four years ago, is it at germany that feels ever confident against today's argentina-netherlands victor? little more confident. one thing about the celebration, although, last night was crazy. let's be clear this was quite a party drug germany. there talking about the next round and what they need to do to prepare. they don't wouldn't celebrate too early. tom, the last time i gave you the toilet flush metric. avenue when. if germany does well, buy cork products. i've never seen so many people eat so much bacon working out their hangover.
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met the training center. a giant cafeteria. the entire audience, everyone here was hung over and yet eating a lot of pork and getting ready for work because it is germany. >> thank you. that goes to the twitter question. >> hard-hitting reporter, "everyone hung over." let's go to the twitter question of the day -- before you get to read those responses, will it still be a success for brazil? >> i think so. i have lost hockey games 7-0. we all have our moments, baseball, 18-to post a quick at the super bowl. peyton manning, that was a complete implode. superstars have bad days. if the superstar can have a bad day, he says, i can have a bad day, to. >> a dramatic a means everyone
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is talking about it. >> blistered economics with the fed meeting today. just the general tone of where your economy stands. us thisi-kumar is with morning, one of our most acclaimed popular guests. he gets a huge response because of his caution on the american economic experiment. how can you maintain your caution street after a bang up jobs report and after even the optimists recalibrate but never the less optimists and you're not? >> if you look at the jobs report, the 280 8000 jobs created, you find many of the jobs came in terms of part-time jobs. full-time jobs actually went down compared with the previous month. second, wages increased by mere 2% year on year. when you count in inflation, wages have gone down in real terms. so these are not people who are going to support the economy during the coming months.
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i am not optimistic on consumption. throughout previous discussions, i talked about it slowing. >> you don't have a 3% vision for our gdp. >> not at all. overall, we have a much slower growth and third quarters and fourth quarters, after 2.5% positive in the second quarter, you'll end up with about just over 1%, which is not good at all. six years after the recovery began. books you mentioned labor. i wonder if it is goldilocks, we created 288,000 jobs and that is the good part, and no which inflation, the good part. we're putting people back to work so isn't that positive? question is, the how long is this monetary policy going to continue with this new normal or low growth forever? is that the objective of u.s. monetary policy? even as it happens, the total monetary base is stolen, the
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feds balance sheet is probably going to be increasing further. inflation eventually will pick up. and my favorite comparison in answer to that is, look at 1978-1979. inflation surged from one year to the other. after g william miller, the fed chairman, you needed a paul come in. >> we will come back and talk to komal sri-kumar, particularly on what janet yellen will do. we will look for those minutes this afternoon on bloomberg television worldwide. >> we have a little discussion coming up. are you going to go with lyft or uber? they're coming to new york and taking on the taxis. what it means for you. this is "bloomberg surveillance." ♪
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>> good morning, "bloomberg surveillance." an important interview on television, israel's ambassador to the u.n., one of the most expressed tipple mats. look for that interview at 3:00 p.m. on "street smart." good morning worldwide, i am tom keene with adam johnson and a special treat, stephanie ruhle joins us today. she will be on air for 18 hours today. scarlet fu is off today. steph, you get a started with uber. >> anybody who watches "market makers" knows i am an uber enthusiast. there's a new player in new york's taxi and car service war. car summoning start up lyft
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plans to launch in new york city this week, taking on rival uber, one of the biggest u.s. markets is right here in new york. this will be about ridesharing. the news comes after uber's announcement this week that it 20%, claiming its service is now cheaper than new york taxis -- >> it is. >> if you watched the bloomberg intern segment, they took it to the test and it is cheaper. >> i took it with my family last night. it is dramatically cheaper. >> and better. that rating system. you have to rate the driver and they rate you. i am on my best behavior. we have an exclusive. you just said "family." you're getting serious. >> wow. we have to bring in matt miller. thate most shocking thing tom revealed is that he took uberx, the cheaper version.
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>> i do not even know uberx existed. i was going suv. >> lyft is something you will never encounter. >> that's not true. before uber existed, we were in the gnarly asked taxicabs. you're not in the black car chauffeured, which you probably were most of the time -- >> never. >> uber is about being in a lincoln town car or maybe even a mercedes, and suv -- >> you can be in a camry. >> you can if you take uberx, their cheapest audit, designed to compete with lyft. a camry, accord. that is what lyft offers. that is not what any of us is likely to take, although, tom keene did the other day. existed, we were taking taxis are the somewhat or
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god forbid the bus, i was a camry is better. >> i agree. taxis are totally uncomfortable, poorly regulated, awful inefficient system and hopefully, these two companies and their competitors break that system. lyft is a different service. it is for brooklyn and queens, places you should really go. lyft will be the lower-priced class there. manhattan,ays in probably tribeca or upper east side, and she's going to be in the suv. >> i'm getting doggone. >> brooklyn is way hipper than where i live. >> i love the bk. >> as the taxi limousine commission said anything? >> i'm sure the taxi and limousine commission probably has a lot of clout, especially with the de blasio administration. but they are a big political force, and their large group of very wealthy medallion owners
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that -- the people that drive their taxis barely break even or someone who drives an uber can make a net $90,000 a year. very different for consumer and drivers. >> i read data brooklyn bowl, so better call lyft. matt miller, thanks for the latest on the car wars. >> coming up, we will be joined by steve wieting will talk about earnings. it is earnings season. we don't want to talk about the bottom line, we want to talk about topline. sales. are they going up? we will be right back here on "bloomberg surveillance." ♪
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>> good morning, "bloomberg surveillance." green on thettle screen. let's get to the top headlines. here's adam johnson. >> powerful typhoon still on the southern end of japan. knocked out power is assigned into okinawa now headed for a larger island. there are concerns about fishermen who are still out at sea. a jury's decision in an insider trading case into long and stricter prosecutors. he was cleared of all charges tuesday in a new york court. he is the brother of hedge fund whoionaire raj rajaratnam was found bill to three years ago and currently serving in prison. -- found guilty three years ago and curly serving a prison. obama has said he did not know about the case when he
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phoned angela merkel last week and she did not bring it up. the arrest of the spy happened days ago. white house officials furious the cia did not tell them about it in advance. >> we are going to hear more about that. >> i would imagine. >> the morning must-read this morning, i will take it. this is an annual summer write. his annual trip to paris in the summer and writes a wonderful essay each and every year. this year's is just wonderful. i can't say enough about how he frames they're not like us. they're just totally different.
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the only equivalent to the french eagle system in the united states is in jersey. in jersey.stem is >> i think we need to take "surveillance" to the south of france next week. this right here, too superficial. i'm here to help. coming up, something else i'm into, media mogul and tech titans. more on that when we come back. ♪
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>> good morning, "bloomberg surveillance." it is a beautiful morning here in new york city. it is a wednesday morning in july. cooler than it has been, but it is what it is, the best city in
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the world. we will be talking about chicago in the next hour. there is new york city. this is "bloomberg surveillance." i am tom keene with adam johnson and stephanie ruhle. scarlet fu is all. let's get a data check. not that much going on in economics this week to knock things around in the markets. withi think is important gaza and israel, with ukraine and iraq. oil doesn't it all that much. -- doesn't move all that much. >> isn't that amazing, print up 108, given all that is happening around the world from iraq to now missiles being fired and israel, oil is down. incredible. conference in sun valley, disney and fox, larry are just severallu
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of the guys. paul, what do think the big themes are? >> the couple will take shape this week at sun valley. number one, content. we've seen a tremendous amount of consolidation on the distribution side of the media equation. comcast buying time warner cable, at&t buying directv -- >> potentially, those are pending deals. >> right. they should close maybe the end of the year or the beginning of next year. but that raises the content. there has been speculation in the marketplace that maybe some of the smaller cable network such as the scripps network or an anc, for example, some may need to get bigger in the face of consolidation in the distribution side. >> at a time when it seems like everyone is conference-fatigued, what is so special? getting the sun valley invite is
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the must get for anyone in the media world. >> you are right. it is primarily because every ceo absolutely attends. they do it in such a white -- >> but why? >> it is a very relaxed environment. there's a lot of free time for the ceos to mingle and set aside and really talk to one another and get deals done. historically, it has been an environment where it is not just the ceos, but their families,. oftentimes they find the ceos and some of the other leaders have a lot of free time to get deals done and talk about the future of their companies and industries, and deals seem to happen. the m&a bankers are good at what they do. >> you mention the smaller companies, the guys with the agenda. are there any companies that could go either way? in other words, they could be targets or buyers themselves? >> some of the bigger companies recently have been mentioned as potentially involved in some
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type of merger activity such as time warner, for example. time warner is a large media content company. inis shed a lot of assets the past years, so they are focused content company. do they need to get bigger or merge with wraps a network, for example, such as cbs? there's speculation to whether these media companies need to get bigger. >> what is the strategy? what are they telling mr. about twoe mr. eiger and five years forward? >> they're saying, listen, consumers are changing the way they consume the media. it is all about digital consumption of media. it is not just simply sitting in front of your television at 8:00 on tuesday night. 21 million people watching the world cup. are there profits and digital? >> there are.
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clearly, that is where the advertising dollars are going. disneyou are a bob iger world rupert murdoch, you have one key issue. number one, to protect your existing ecosystem, which is extraordinarily profitable. that is the broadcast and cable business. at the same time, you need to place your bets for the digital business that will develop over the next two to five years because that is where consumer behavior is going and advertising dollars are going. you need to make sure you have the best out of the both sides. >> these guys with gray hair, white hair, do they need to figure this out? when you look at disney pay the kind of dollars they did for maker studios some are saying, was this the cheapest deal or most expensive? do they actually know what they're doing or just playing defense? >> i think it is a little bit of both. we saw probably the worst example of media company getting the tech technology one could argue is news corp. with myspace.
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they had to write down that investment almost the day they do the deal. there are lots of deals out there. may maker studios got him a their example -- may maker studios, they are in example. youtube content creators, the folks that put all the content on youtube. those companies are being sold for billion-dollar valuations. these are relatively small bets. >> there you go, boston hometown. >> the most important media story this week was the non-revenues at youtube. i am hugely skeptical of the certitude of profits in digital. it is my own opinion, but there's youtube going, well, we don't make all that much money. >> it came out that you to a revenue much less than the street thought. but what we do know, you take a look at where ad spending is going will stop it is a 3% to 4%
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growth, but on digital, 15%. long-term, that is where the growth is for a lot of these media companies. >> highlighting gopro, now a digital property, the one property that can make it work, right? that is where the action is. >> we talked about some of the new york and hollywood media moguls coming to sun valley. for the excitement has been has been technology, the folks from silicon valley. there is much a presence in the last five years as has been the rupert murdochs of the world. expect to see facebooks, googles , even alibaba will be at sun valley. you'll see a lot of discussion around this people. >> who are the most interesting people to hear from, snapchat or cbs? >> one of the most interesting things we're seen has been the valuation applied to apps. i'm still trying to get my head around after six months,
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facebook and $19 billion for whatsapp. the realto be where value is being created is on apps and -- that is where the consumer consumption in the media is going. i suspect we will see some of that at sun valley. is therget, oh, yeah, it stock market. what is attractive right now? where is the value in all of these people gulfstreaming and to sun valley? >> for the immediate and technology probably do based -- probably, the past four or five years for the sectors. for the traditional media companies, they have weathered the threat from digital disruption very, very well. we got netflix was going to put otherme warners and cbs's business, but they're complementary. fundamentals are pretty good for
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media, advertising is pretty good. number two, they are paying back a lot of cash to shareholders from a dividends, buybacks, and that is driving stocks. >> my observation is, i'm using netflix less and less. >> i would agree. i went on netflix -- >> i am not a netflix user. i think amazon is where i end up. >> amazon prime. by paul krugman in 1988 saying he did not believe in the internet? paul sweeney of bloomberg industries, thank you for your perspective. coming up, our single best chart. this will absolutely love your mind. talking about the shocking numbers behind gun violence, specifically in chicago now people are jumping with it. we will be right back. ♪
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>> good morning, "bloomberg surveillance." let's get to the top headlines. >> israeli attacks are causing heavy damage for the gaza strip. an army spokesman says warplanes
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hit 130 targets today. the palestinians say the airstrikes killed eight people. the military's trying to stop bucket could fire from gaza which is controlled by hamas. israel is threatening to cut off oil and electricity to gaza. troops for0,000 possible invasion. third-largest democracy, it will take to extend finish the final tally in indonesia. expected say the strong turnout among the nations 240 million people. the home of rock 'n roll hall of fame and 20 football has another claim to fame, looks like the republican party will hold its 2016 presidential nominating convention in cleveland. the gop decided on cleveland state of dallas. no republican has ever won the white house without taking ohio.
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those are the top headlines. >> the single best chart right now. i will do it. this is one of our themes in the next hour, paul barrett will join us from bloomberg business week. he is expert on handguns. while itt in chicago, was relatively quiet in chicago, there were only two murders with three winded. our single best chart touches on the violence that is seen in chicago. this morning, you have property crimes doing better. quality of life crimes over 12 years or so doing better. violent crimes he even done a little bit. that barely discovers the violence that was seen and exploded over the fourth of july. >> what is the quality of life crime? >> i don't know. i guess like, you know -- who knows. the violence in chicago, it is better than it was.
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>> it is declining. what is also strange, i mean i'm glad we did this chart, but i can't wrap my head around seasonality to crime? >> it is the heat of it, in the summer, that is when it seems to rise back in 1963 and 1964. it used to be one or two or three games and now there are over 600 factions within chicago. five and six major factions warring about the divvying up of cocaine and heroin in the south and west side of chicago. this is an issue that has been percolating. we will talk to paul barrett about it. >> you wonder how many other issues are percolating under the surface. we never talked about it and i'm glad we are talking about it in the same way we said for years ago we were not talking about two to 2000 children effectively being held -- >> i don't know, the situation in chicago has been a headline we have heard for such a long time. it is such a distressed city.
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if you look at the public school system, if you look at hospitals in chicago. rahm emanuel from the get-go has had his work cut out for him. things are improving, but it is a tough town. >> remember the riots back in the 1960's? >> there it is. we will talk to paul barrett on the in the next hour. have three photos today. admittedly -- >> tom keene's twitter photo is my favorite. >> smoke over gaza. tensions escalating as a military and political confrontation between the two sides. no signs of abating. aviv.will speak from tel i get the sense from the reporting, and this time is taking a different approach. >> i'm curious to find out if that is the case.
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number 2 -- >> a different kind of smoke. >> the first customer showing her purchase of erewhon it in seattle, washington -- purchase of marijuana in seattle, washington yesterday. this is kind of trippy. >> if there was a usual suspect beeup who i would guess to the first person to purchase weed in washington, i'm not sure i would have guessed this lady. i do like the stores painted green. if you notice, a huge amount of security there. it doesn't seem like they needed it. it wasn't like there was an apple store line up around the block will stop their pretty huge amount of security and infrastructure around preparing for this. is a big tax revenue source for all of these states. number one, germany beating brazil 7-1 yesterday, leaving brazilian fans stunned, devastated watching the game. i was. i was on the phone with a friend
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a secondned away for and he goes, there is another one. there were four goals within, i don't know, a minute. >> komal sri-kumar with terrific perspective on this. -- i'm like, when did the yankees and red sox play? >> this is a big deal. not only do brazil lose big to germany, but also there was a lot of controversy over the amount of money spent on the stadiums in the city. the infrastructure basically did not exist even six months ago. the billions of dollars which were spent rather than improve the situation in the favellas, essentially caused a big change. what i am watching for is the impact this would have on president dilma rousseff's possibility because she is been riding high while brazil was
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doing well in the cup. now people will say, we spent all this money and resulted not even when. ie cannot control that, but think this was a big issue. >> the performance of the red sox come the commonwealth of massachusetts is under threat. >> brazil wasn't the only loss. they said, brazil is going to win. it was a 60-page report out of goldman. two hours ago, they're now saying it is germany. two years from now, they have the olympics coming up. >> absolutely right. the impact it will have on germany's much less the impact it can have on brazil. the world cup was everything to brazil. germany has a lot of other things going for it. >> dilma rousseff faces elections in october. >> don't forget, our twitter
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question of the day -- ♪
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>> good morning, "bloomberg
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surveillance." keene with adam johnson and stephanie ruhle in for scarlet fu today. time for company news. twist from amazon in its battle with a book group. many authors are caught in the middle of this massive revenue dispute. amazon says it will give any affected authors all of the proceeds from digital book sales. amazon has blocked pre-orders of some of the books by big-name authors already this year. settles price gouging accusations in new york city. the car service is agreeing to limit rises during emergency. uber a mobile app to connect riders with vehicles for hire. the company was set they were unreasoning -- unfairly raising rates on storms and holidays. it is for people who were
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partying new year's eve. 7-eleven is serving up a week of free drinks and treats to push its mobile app. the company is giving away es britts birthday this friday. there'll also be free cookies and ice cream the following week if you download the app. the convenience store chain was founded 87 years ago. who can resist a free slurpee? >> our guest host this hour, komal sri-kumar, global strategies. he is made headlines staunchly disagreeing with economic consensus, even as the optimists recalibrate often difficult six months of gdp. komal sri-kumar suggests the part-time nature of our labor economy and to the consumption will force the fed's hand. he joins us now on fed policy. when janet yellen talks about slack in the economy, what does she mean? >> she and alan krueger
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princeton disagree on how much extra labor is available. slack is an important term, tom, because if there is a lot of slack, the part-time people will become full-time. you don't cause inflation, rate and have to go up, the policy doesn't tighten. alan krueger disagrees as to whether there's so much slack still left. this a disagreement to how much the fed can go without tightening. >> you nicely framed one of the two or three debates of right now. if we have a central-bank-induced great distortion, and if everything has gone up in value, at risk are those the ua shins that kruger and yell and get the math wrong? >> that is an excellent question and a timely one.
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what is happening here is, if the fed -- even if the fed believes there is going to be some slack and if they turn out to be wrong and inflation picks up, they have to tighten when the person on main street, the person who is not having big wage increases, still suffering from the situation in the interest rates go up and the economy tightens and the employment is hurt. that is the major reason why the debate is very important. because if the fed has to tighten because of reasons of not having enough slack and inflation pickup, then unemployment suffers and we go back into recession. that is also the risk of blowing the bubble up to big. because the bubble will have to be burst. >> a strategist writing that what we need to do is look in the meeting today for different words, different verbiage. in other words, does moderate become varied? does slightly become more? >> i think there may be slight
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change. in terms of if there's more inflation and they have had, if janet yellen, if they think there's more of a moderate .rowth or pickup in growth if they do, then i think the market will be muddied. if the fed starting to believe the economy is in much better shape. the real point i think what to wait for is, are the minutes going to contradict what janet yellen said at the imf last week? i don't think she can make such big changes, which is why i think the news is going to be no news later this afternoon. >> don't tell us that. , breaking news, "there will be no news is afternoon." thank you. this is a story we were talking about, on the spy probe with the united states. a second suspect is being looked
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at by the german government. they're also searching the home of the first suspect as well. ♪
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>> this is bloomberg
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surveillance. >> washington confronts an immigration crisis. given sluggish revenue growth, will companies cut jobs? and again, the gaza strip explodes in violence. good morning, everyone. this is bloomberg surveillance room our world headquarters in new york on wednesday. joining and him johnson and stephanie rule. starlet who is off for the hour. here is adam johnson. picture overnight. but rose by about 2.3%, china producer prices fell by about one point three percent. it's a volatile number. it has gone back and forth in the past few weeks. we will get the fomc minutes all stop that will be in porton.
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-- important. no earnings today, but at 4:00, we will all be watching netherlands versus argentina facing off in the second game of the world cup semifinals. the winner will go on to play germany on sunday. some company news for you. citigroup posted an agreement with federal prosecutors to settle a financial crisis. a person familiar with the negotiations of the bank could be fined at least $4 billion. the deal could be final as early as next week. the justice department says citigroup misled investors about mortgage françois heise -- while hiking prices -- while housing prices plunged in 2008. restructuring.r
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i wouldn't want to show shareholders that the company is allergan wants to show investors the company is strong. and by very is selling -- and .lackberry is selling 200 employees will focus on auto entertainment systems. correct front and center, the violence in israel and the gaza strip. this time it is different. there's something distinctly different about israel's hamasse to thomas -- attacks. joining us.lieb is tell me about hamas and their relationship of the -- with the
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people of the gaza strip. the smuggling tunnels have not been able to bring the kind of tax income it once did. the people of gaza have not had easy times of late. thomas is in control. is in control. >> when israel responds, what are they responding to? >> when israel responds, they are aiming, israel said, to take out not only the people of the that the u.s. and other leaders consider a terrorist organization, but they
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are also aiming to take up the capacity for them to take -- send rockets into israel. >> we have heard reports of calling up 40,000 reservist troops. has this been approved? >> most recently, we've heard intelligence houston or mustw steiner saying they crush hamas's capacity. the palestinian president went on television last night feeling for international help. traditionally, that has meant egypt. any indication of support around the world? >> a bit of a problem there.
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morsi backed by the mild -- the muslim brotherhood was in charge of egypt, hamas would listen to the leaders in egypt. lcc -- have president sisi, responsible for crushing the muslim brotherhood in egypt. perhaps, turkey. it makes you wonder who is there right now to break the cease-fire if we get to the see one.that we might >> what is the position of the overnment at the moment? >> israelis are still under fire right now. i just received a picture from my child's kindergarten with all the children asleep, having their lunchtime in the shelter.
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there is not much questioning should notat hamas be indiscriminately trying to target civilian population. even barack obama has come out and supported that. the same time, there are concerns that we may see a ground invasion. we may see many more civilian casualties among the palestinians. that is something that will concern many israelis as well. >> thank you from the news bureau in tel aviv's morning. it is earning cc and -- earnings season and revenue season. it is always a wonderful time to speak to steven wieting. seenis the steve wieting as a going to earnings season? -- as we go into earnings season? asx the perception is not
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bad as we thought it might be. at the beginning of the year, they were just completely trounced. >> share buybacks and dividend growth as part of these announcements, does that continue? >> o, absolutely. david --git in double-digit dividend growth through the year. >> let's clarify that. >> there will be places where it is strong and where it is nonexistent. there will be strong dividend growth catching up with the numbers of the earlier cycle. >> that is profound to hear that. dividend roads, and did i hear you right, double-digit earnings growth as well? >> no, this is a catch-up to earlier gains and profits. mid-to high single digits on profits this year was up >> i
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thought the economy underperformed on gdp. wire you so enthusiastic? -- why are you so enthusiastic? >> these are largely driven by assumptions. gdp?en't these linked to >> absolutely. we had 100,000 -- 190,000 jobs per month created in the first quarter and second quarter. now we are doing better. it will be somewhat stronger, but we are expecting stronger. >> those who believe this is just corporate america in a hope economy -- you actually think this recovery is real? more for theuch stock market. you've got to consider this is a v-shaped recovery with corporate profits. >> what does that mean? >> profits rose dramatically during the cycle. much more so than all of these other factors.
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so goodis what you are at. it's not so much the rate of change or the movement of arnings, or not just sustained level of earnings. but that only gets you so far. again, last year was the recognition that profits were sustainable and high and they grew from the cycle that we were catching up with earlier gains and profits. we didn't have another collapse. >> there is one caveat i want to clarify. costs are going down, so you're able to up your margins. what about the top lines -- topline sales? but a growing as well? grow in the coming year. thehe energy sector, we had oil price holding down revenues, and now it has gone up. there are some new issues around
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the sources of revenue. as we begin tog look at earnings. bonds, at stocks, bodies, oil. movingn oil, fractionally this morning. up, a very serious violent weekend in chicago. surveillance"berg on bloomberg television. ♪
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>> good morning, everyone. this matters now to our guest host. stephen wieting is at citibank. the calm across the asset classes is and said -- is unsustainable. your retirement is experiencing volatility never seen before. -- what isr storm your plan for the storm? we will see more volatility. what will it do to our markets?
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>> assuming the future will be less volatile than the past bull markets is a leap of faith i would not make. we are in a time where frisk risk-adjusted returns have been exceedingly strong. a lot of this does make fundamental sense. we are made or made to late mid-to latenomic -- cycle of economic recovery. are providinge -- liquidity around the world. in the next american downturn, and there will be one as there always has been, i would not expect the kind of crisis we had in 2008, 2000 nine at all. at the same time, times of extremely low volatility may be a greeting -- breeding ground. >> do you see this at all?
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i don't see it. >> you can see it in places in the stock market, in credit markets. sabers are willing to take a lot more risk in credit markets. at the peak of the crisis, 20% yield was a high yield. now it is fine. tactically, what does a strategist say someone should do? forget about the big picture. to-do, my two-do -- given this climate? >> we are finding stronger overweight and depressed parts of europe. we continue to look at low rates on fixed income as relatively unappealing. we would be careful here, because a one percent down day with -- down day is not a correction.
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the stork bull market into your corrections averaged 12% to 13%. >> we have not seen that. >> we have not seen anything like that. you do worry that there is a pent-up volatility. me like a danger to the macroeconomy, but a future building property. >> we will be right back. steve wieting is with us. stay with us. ♪
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>> good wednesday morning. it's our twitter question of the day. were you stunned after the team's stunning loss? will the world cup still be a success for brazil? for those watching and listening this morning in brazil, we really appreciate your special response. there is absolutely no charge for our work twitter question of
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the day. after their team setting loss, will the world cup still be a success for brazil? adam johnson is with us as well as stephanie rule in first prelate who. adam has our top headlines this morning. >> there is a new development today raising tensions between president obama and german chancellor angela merkel. allegation investigated involving the u.s.. an operative has already admitted he spied upon germany for the u.s. israeli attacks are causing heavy damage in the gaza strip. plaintiff more than 130 targets today. palestinians said the of strikes -- the airstrikes killed eight
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people. cabinet okayed the mobilization of 40,000 troops for a possible invasion. any jury's decision in an insider trading case ends a long winning streak for prosecutors. a tip about rush pressure on him jaratnam led to his being found guilty three years ago. >> sometimes you rip up the script. this is so urgent and so stunning that we have to do it. chicago is at war. over the fourth of july weekend at least 12 work -- were killed, 84 when did. this year so far, 281 have been murdered. and is with businessweek truly one of our nation's experts on handguns, which is part of the gang violence that
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you see to the west side and the south side of chicago. of "glock" andr joins us now. you would presume none of the guns with -- guns are legally owned, are they apoplectic -- are they? around if you're walking like this, it is illegally. you have to get to the criminals and get the guns away from them. >> in the article i read, there is all sorts of social tapestry. at the bottom of the article it says we need greater gun enforcement, damages the and and the like. what is an action legislatures can take even if it doesn't address the immediate solution?
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>> i would begin with the police. there are cities, such as the one we are sitting in right now, new york, where gun violence has been reduced drastically over time, and that has large x -- largely been due to more aggressive policing in the parts of the city that gun violence is rife. >> i will read the numbers. los angeles, 390. new york, 570 six. and double that for chicago, 1103 shooting victims. say, -- let's stay on national legislation attention. i spoke to one person this --ning and said, is there a two people realize there is a good chance of being hurt in chicago this weekend than any rock? -- in iraq? do people realize how bad it has gotten? >> that is why we are sitting here talking about it. it has developed into an anomaly
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where in a nation overall gun violence is declining steadily, but people do not understand that we still have these pockets. this is not north michigan avenue. --s is certain the street certain discrete neighborhoods. we know where it is going to happen and it happens all the time. >> should the political leaders be asking for more help or more attention? or does rahm emanuel want this kept quiet because this is his backyard? >> what they need to do is a relatively straightforward policy shift. they need to flood the most violent neighborhoods with policemen they already employee. they have to calm things down. >> and we need to make things clear, there has been an improvement in the murder rate in chicago in the last decade. fear of this expanding to other cities through the warfare of things.
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>> that is not the way these schemes of violence work. spreadingsee it across the country. the larger context is that the u.s. has become much less violent over the last 20 years by an order of about 50%. and that is true in chicago as well. sadly, because we do have this enormous arsenal of illegal firearms in private hands, we are prone to having these of surges -- up surges of violence. i'm not saying it is not anything to worry about, but on the other hand, it's not a war spreading. >> really have about 30 seconds. is there any evidence where people are told to turn in their guns and we will pay them that those guns, off the street? beenose programs have not very successful historically. >> are they using fancy guns or cheap guns? >> they are using whatever is available. a are not fancy guns and they have been on the street for some time. >> pallbearers, thank you so it, thank youhere
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so much. >> coming up, we discussed president's request for nearly $4 billion to address immigration crisis. this is "bloomberg surveillance." ♪
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>> good morning, everyone. it is a beautiful new york city. we will be watching argentina and netherlands. >> timeout. girls don't watch soccer? you may.
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but i will be watching soccer with a girl. >> there it is. central is with us as well. seth rule is with us as well. >> he will quickly muzzle me so you won't hear me much longer. here we go. take a look at brazilian fans on the left. german fans on the right. it was the most lopsided world cup semi final ever, and also the worst defeat in brazil's history. and the biggest bust ever for a team hosting the tournament. brazil was missing its best player because of an injury and germany was favored, but nobody saw this coming. by the way, it could be a blow
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for investor confidence in brazil. we will find out. brendan, you are all over world cup. you were in germany not that long ago. but i was in brazil not that long ago. itsil is not just missing best player, but its sole right now. we think about sports as a way to compare countries. bloody in- it is less those cases. that is absolutely true. germany has been training for 14 years and has been training players and fining players in a very comprehensive way to get these results. >> they came up the field with a speed i have never witnessed. is it original to germany, or mirroring some other formal of dutch formula that has worked? -- or mirroring some other formula that has worked? players that of
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were paid well in beasley joe. they lost in the first round. they all thought, we need to fix this. how will we fix this? they came up with a very non-german answer -- we need talent. brazil itt, it was had this amazing wellspring of talent. germany thought, we only have 180 million people. we will find absolutely everyone of them that can kick a ball. since 2002, there have been youth academies all over the country. england has 1200 license coaches. germany has 28,000. >> the political ramifications for brazil. they have to regroup for years after the world cup. what do you think will be the societal impact? >> i think that the loss was so there,d, when i was down
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everyone was not taking it out on brazil. the team was performing so breath -- so badly that i think they will get a pass. it was so abysmal that it cannot have been anyone's fault but theirs. >> is anyone drawing and economic parallel here? if you look at the way germany planned and trained and organized this, does it say something about german culture versus brazil? >> there are two ways to go about this. one is you find your talent and the others -- the other is you grow it. we know that germany is going to win that contest against premature anybody. -- pretty much anybody. day, i give this to adam johnson, comparing princeton lacrosse to syracuse. it was all about playing a slow,
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methodical, planned out game. and syracuse had wild animals racing up and down the field. >> which is what you've seen from brazil. i was stunned, and to your point, it was so tight. yesterday in much of the game, the german players were in 1520 feet of each other -- 15-20 feet of each other and popping the ball back and forth. >> germany played methodically and they moved up the field in a way brazil cannot even imagine. and they have gone out and found all these wild animals that can play the game. they have both. germany always had organization on the field. now they have talent. >> tell me about netherlands and argentina. i'm exhausted. argentina, the way they've been playing, it is 10 plus lionel messi, the best guy in the world. netherlands, they can move it up the field. i don't see argentina pulling this off. >> brendan greeley on football.
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twitter question, go. >> we have to bring it back to the twitter question after the break. >> a quick data check. all you need to know, it's flat. >> adam johnson suggesting the markets this morning are flat, as they are. we do welcome you. it has become front and center all of a sudden the major story. how about $76,923.08 per child? as there is republican and democrat rhetoric about our nation's borders, they have all
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become secondary issues in the heat of summer. has this come out of nowhere for the politician? >> it really has. the interesting thing is that it actually did. we actually started hearing about it in the weeds through the appropriations committee staff about two months ago. they were certain to raise concerns about this, but it was nowhere near a national issue and they had not come near anything of a weeds policy. let's just try to get washington to friday. what will you be listening for as the politicians deal with the fact that these are children? >> that in and of itself makes this an extremely difficult issue. administration made their emergency funding request, $3.7 billion, yesterday. not a great response on capitol
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hill from that. some are publicans want that paid for. the administration not even considering that as a possibility. others are saying, you are just tossing money at them and no fixes. there is no path forward right now for that money. that is the first issue. the second issue is just in today. the president is heading to texas for a meeting with public officials, religious groups, and elinor rick perry on this issue, but not going to the border. the optics of that are very interesting. they basically do the opposite of what people wanted to do when it comes to optics. they get very annoyed and say, you should give a speech from the oval office or go down and deliver a speech from the border. how the political world reacts to that and whether or not it is viewed as the president trying to get away from this will be a big issue the rest of this week. sense of how any the administration plans to spend that $71,000 per child?
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>> broadly. they need a lot more space to hold these kids as they come over the border. they also want to try to infuse money into immigration lawyers. there is a lot causing major problems, a trafficking law. it is well intended and very bipartisan, but it requires extralegal protections for kids coming up. there is not the bandwidth or the lawyers to be able to handle those added protections right now. >> let me ask a difficult question, and it is an insensitive question. if we were to send the children back home, what would they go back home to? >> a terrible situation. that is the difficult part. there are top immigration advocates within the administration that have fought so hard for some type of overhaul in the last four or five years. they have been getting hammered
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from immigration advocates for not doing enough. now they are faced with a real possibility that they are putting kids on buses and planes and sending them back to gang infested areas, areas with a lot of violence and drugs. if they want to be able to move forward broadly on any kind of immigration proposal, they don't have a choice. kidsaw is to send these back. you've heard it from officials in the last couple of days, look, we wish we had a different option and we don't. we have to send them back. but it looks really bad. >> they are asking for about $4 billion. how much money does he really need to help these kids? that $4 billion is just to get them through the court system. >> it is a lot more than that. the administration is first-rate knowledge this is a patch, not a long-term fix. acknowledge this is a patch, not a long-term fix. this is a very long-term problem. >> phil mattingly, thank you for that update from our news bureau
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in washington. >> coming up, secretary kerry ew. l this is bloomberg "surveillance ." ♪
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>> good morning, everyone. right to the top headlines. here is adam johnson. >> verse, and update on the powerful typhoon headed toward japan. at least two dozen people are reported dead and others injured. -- at least two people are reported dead and dozens others injured. in theevelopment today spine cure that is raising thatons -- in the spying is raising tensions between u.s. and germany. a second allegation involving the u.s. an operative arrested last week is already admitting he spied on germany for the u.s. thenew york times says president had not been told in advance about this case. the republican party will hold its 2016 presidential nominating
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convention in cleveland. the gop shows -- chose northern ohio instead of texas -- that would have been dallas, by the way. it was probably to keep ohio on its good side. no republican has ever won the white house without taking ohio. do alsoon't forget, we has gary tom, president of goldman sachs. cleveland also has gary tom, president of goldman sachs. you've got a soccer ball in hand. world cup fever? alexius, i do. but i will not hold -- >> yes, i do. but i will not hold this up yet. the first and want to talk about is the former ceo of lehman brothers at work at morgan stanley for a decade and then become a research analyst. be teaching at nyu full-time.
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>> what do you think about that, tommy echo -- about that tom? >> what does it say about wall street that he is hanging it up? >> there have been -- has been a trend of people who have been successful and painted away and then go into the classroom and began teaching. he comes at it from so many different angles. he writes the famed black book for xander bernstein and everyone reads it. execution the interest -- >> hugely influential. this is why i have the ball. who do you think makes the materials in this ball? >> i would say adidas, but i have a feeling it is a trick question. >> right. bayer, known for the aspirin, they make the
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products, the plastic products that fill the ball. guest will be talking about extending the product line into other areas, but also more stem educated students. philip blake is having a hard time hiring. 8:00.ty lou at coming up on our agenda, citigroup and its potential billion $ -- settlement. -- billion-dollar settlement. ♪
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>> good morning, everyone. tomorrow on the program, this is an important conversation. oll will join the meeting. he has been a persistent bowls and early 2009. bull sincetent early 2009. let's get to our company news. here is stephanie. but i'm especially excited for
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especially >> i'm excited for bob doll. amazon says it will give any affected authors caught in the revenue dispute all of the proceeds from digital book sales. ofzon has lost pre-orders earlierks by big names this year. and hoover settles price --uber settles price gouging disagreement here in new york city. new york attorney general said the company was unfairly raising rates during storms and on hollywood -- on holidays. i don't know about that, but clearly it is in demand. people like it. and 711 -- 7-11 is giving away
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free slip these this friday. the convenience store chain was founded a total of 87 years ago. >> secretary of state kerry and treasury secretary lew are an annual meetings concerning china . bloomberg news reporter henry sanderson is there and joins us on the phone from beijing. what did they discuss on day one? >> the agenda today was looking at areas where they could cooperate. and also, just getting a sense strategic mistrust between the two sides. they talked about climate energy -- climate and energy issues as well as disputes and what each
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side wants the other economy to do. was the easy it sounds like the warm-up. tomorrow gets a little tougher. they talk about current 10 industrial espionage, the debate over the japanese island. can you talk about some of the tougher points? >> some of it was brought up today. there was a request for china to move toward more of a market-based system. the chinese finance minister said china would not stop intervening in the currency markets, because china's economic recovery is not stable yet. also said it was up to the u.s. to make a contribution to , that china could not do the same thing it had done after the financial crisis. some tough through areas today, but you're right. territorial disputes and what is going on in the south china sea
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and east tennessee will come up tomorrow as well. >> it is interesting to have two cabinet secretaries traveling together, secretary kerry and secretary lew. have we seen that before? think it is pretty standard for both of them to come. you left the meetings to join us on the phone. we appreciate you taking the time. hopefully, we will speak to you again tomorrow. thee go back to july and advent of earnings and revenue season. it is upon us and the linkage of how companies perform is in each instance tied to labor costs. is an economist and he joins us. let's talk about the revenue line we are going to see. phenomenal gdp has been lousy for a long time.
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appropriate revenue growth? >> it is likely to be for rather than six. in terms of operating profit growth, we will do someone better. somewhat more than that. i think it will grow more than that this year for technical reasons. >> what is the pressure to cut costs right now? general, is this a time of job reductions for our companies? no, i think you saw yesterday's data for the u.s. economy overall, unfilled job openings have been at an all-time higher level than during any economic expansion. that raises questions. we've had the unemployed a great from 10% to six percent. 7.5% to just from over six percent in over 12 months. the unemployed rate is not going to be zero before this expansion
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is over with. the way the unemployment rate is falling, the fed will ultimately have to attach some attention to capacity restraints at some point down the line in the american economy. it may have to be more than two years from now. >> i want to get your take on where you are. labor force participation and almost 40 year low. in other words, we are not counted as many people. >> fewerrn about that? people are actually searching for jobs or working. cane always had the fed print money, but cannot print labor. the incentives to participate in the labor market doesn't come from wages. it comes from gaining things like health insurance in the united states.
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you have issues such as the pending decline in the labor baby-boomto the demographic. numbers that have left the labor force and have not come back. >> understood. time for the agenda. tom, i -- you go first. you have to hustle to the radio booth. this began overnight with the heating up between israel and gaza. it will be very interesting to see the surgical, the tactical response of israel to lamas and how they approach the gaza. >> israel left the gaza strip 40 years -- a few years ago and now they are recalling 40,000. it makes you wonder if they're going back in. this potential settlement that we are waiting on for citigroup, 7 billion of which if i have
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read the news correctly -- $4 billion to the department of justice potentially, and then $3 billion to consumers, the people who got caught in the home mortgage mess. >> what is extraordinary about that, when people are looking at the numbers, many are saying, what is the department of justice doing? just putting a number in their? numbers, itary would be great to find exactly where these numbers are coming from. people didn't go to jail. they said these banks were too big to jail. no one really fell on their sore for -- fell on their sword. them.d, let's just find they are paying these massive bonuses july >> and simultaneously. >> and still the bonuses. i have a much sexier agenda. world cup, netherlands versus argentina, noon today. everyone will we watching it.
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-- will be watching it. we asked whether the world cup will still be a success to the country of brazil. answer the first, no, this is a disaster. another answer, yes, because it entices people to the rio olympics. i will actually agree with that. it was so nice of my husband to send netsuite in. i'm going to say he is the winner. >> i was going to mention one -- one other thing about germany. we talked about the world's largest trade surplus measured -- notars or euros china, germany. >> really?
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the world's largest trade surplus. and it is a country the size of wisconsin. >> and much less friction on its currency issues. >> thank you, sir. 70 rule, thank you, ma'am. rule, thank you, ma'am. i will see you later. ♪
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>> good morning. it is wednesday, july 9. we are live from bloomberg world headquarters. you are "in the loop." i am very little.
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-- betty liu. tod hands will be headed nyu. i will have his first interview since his retirement announcement. a big deal for those that followed his career for decades on wall street. equity futures indicate stocks will rebound at the open after a two-day selloff. we will get a minutes from the fed policy meeting. citigroup and closing the investigation into mortgage bond sales. to $7ay have to pay up billion in fines. prosecutors said the bank misled investors. president obama heads to .ongress -- texas the number of unaccompanied bordern caught at the has


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